Saurashtra bourse moves towards corporatisation

SKSE splitting ownership and trading rights

In a move aimed at changing itself to a corporate entity, the Sautrashtra Kutch Stock Exchange Ltd (SKSE) has begun the process of demutualisation by taking up an exercise of division of ownership rights and trading rights in the stock exchange.

Following a Securities and Exchange Board of India (Sebi) directive, SKSE has written a letter to all 416 members, asking them to purchase shares of SKSE. Each member will require to deposit a sum of Rs 500 with the stock exchange and will be allotted 50 shares of Rs 100 denomination.

"This is a step in bringing about a corporate entity in the stock exchange. As many as 127 of the total 416 members of the stock exchange have already subscribed to the offer of shares. However, members of the stock exchange need to purchase shares of the stock exchange before March 31, or they will not be entitled to various rights," said Suresh Raval, executive director, Saurashtra Kutch Stock Exchange.

Commenting on the changes that will take place once the demutualisation process is complete, Raval stated that the representation of brokers will come down from the present level of 50 per cent to 25 per cent.

"At present, brokers have a representation of 50 per cent on the board of directors, while public representatives account for the remaining 50 per cent. The registrar of companies and the collector are Sebi nominees on the board," said Raval.

Saurashtra Kutch Stock Exchange Ltd was incorporated in July, 1989 and got recognition from the government of India. The recognition have been renewed from time to time by the central government and Sebi.

In December 1999, Sebi permitted the regional stock exchange to acquire membership of bigger stock exchanges like BSE and NSE by forming a subsidiary company and provide trading platform to the brokers of regional stock exchanges.

SKSE floated a subsidiary company namely SKSE Securities Limited which is a 100 per cent subsidiary has acquired membership of BSE and NSE and it has also got SEBI registration. SKSE Securities Ltd is a depository participant of CDSL.

This exercise is being undertaken as per the Securities law (Amendment) Ordinance 2004, the process of demutualisation has been undertaken.

"The company will become a 'for-profit' making company from the existing non profit making company. SKSE is all set to become a corporate house managed by professionals with a new board structure, regulated by Sebi and owned by shareholders," said Raval.